A year ago, Adobe started selling Photoshop, Illustrator, InDesign and its other creative software in a new way: as a service called Creative Cloud. They’re still big, powerful applications that you download and install on a Windows PC or a Mac. But paying one monthly fee — $50 for the standard version, or $30 for people who already own Creative Suite CS3 or higher — gets you access to all of the company’s creative apps, plus cloud-based services that tie them together and let you store your projects in one online repository.

Today, at its MAX conference in Los Angeles, Adobe announced a big upgrade to Creative Cloud. Among other changes, it involves even more cloud-related features, like the ability to sync a program’s settings across all the computers you use it on, and the option to download 175 type families offered by the company’s excellent Typekit web fonts service for use on your computer.

But equally noteworthy was what Adobe didn’t announce: an upgrade to Creative Suite 6, the conventional, boxed, pay-one-time version of its bundle of software. While the company will go on selling CS6 and issuing bug fixes, anything new will be available only to Creative Cloud customers, in new CC versions of the apps, like Photoshop CC. It’s at least as striking a shift as when Adobe introduced the first version of Creative Suite in 2003, thereby winding down its era of stand-alone apps.

And even though today’s news is less about technology than it is about purchasing options, it’s still big — not just for Adobe, but for the software industry, period. It’s another nail in the coffin of the whole business model of software, as it existed in the pre-Internet days. Even software that isn’t a web-based service is now being priced, sold and upgraded as if it were one.

It’s not hard to see why Adobe likes the idea of Creative Cloud: it gets people into a mode of paying ongoing fees, year in and year out, to get access to Adobe products. The company no longer has to sweat its way through years with no suite upgrade, wondering whether its next major revision will be exciting enough to be a bonanza for its bottom line. And by ceasing major development efforts on Creative Suite, it can focus all its efforts on Creative Cloud rather than juggle two variants of the same product line.

But is Creative Cloud a better deal for Adobe customers than Creative Suite was? There’s no one answer to that question that’s applicable to everyone, since everybody uses software differently. Basically: Creative Cloud offers lots of value if you use multiple Adobe apps and like having access to the newest features right away. But there’s also a contingent of users who cling to old versions of software for as long as possible, wringing every nickel out of it. They aren’t going to be enthralled at the prospect of being asked to pay a monthly fee rather than one (very) occasional lump sum.

“The reason we’re doing this now,” Adobe’s senior director of marketing for Creative Cloud, Scott Morris, tells me, “is because [Creative Cloud] adoption has been so amazing.” (In the year since the service was launched, the company has signed up 500,000 paying customers, plus another 2 million who take advantage of free Creative Cloud cloud-storage features.) While Adobe is telling its customers that Creative Suite is a dead end, its move isn’t risk-free: in a worst-case scenario for Adobe, a critical mass of users might decide that Creative Suite 6 is just fine and choose to avoid Creative Cloud for as long as possible.

By continuing to offer Creative Suite 6 indefinitely, Adobe is easing the pain for conservative types who don’t like the idea of Creative Cloud; they’ll only be compelled to switch once the company offers them new features they find irresistible.

Then again, it also wants to make Creative Cloud attractive even for folks who want to move at their own, possibly lackadaisical pace. The company plans to release new features for its apps as they’re ready rather than in less frequent big-bang upgrades, but it won’t automatically upgrade anyone. Creative Cloud subscribers will be able to download and install the new stuff when they’re ready, and to roll back to an earlier version if they encounter any problems.

All of this leaves me with one question: What does this mean for Microsoft Office? Like Adobe, Microsoft very much wants its customers to think of its applications as a service and to pay for them that way — that’s the whole idea behind Office 365, a service which is to traditional Office as Creative Cloud is to Creative Suite. Microsoft has priced Office 365 to make it an appealing proposition, but it hasn’t yet forced the issue by saying it won’t update Office’s conventional version.

I’m guessing that its road map involves the newest conventional version of Office, Office 2013, being either the last one, or the next-to-last one. But Office users are notoriously cautious upgraders, and Microsoft’s track record for getting its customers to embrace change is spotty. (Exhibit A: the continuing popularity of Windows XP.) Even after the company declares that Office is a service rather than a suite henceforth, it may be many years before all its customers get with the program. It’s just a matter of whether the holdouts seem to represent a sensible plurality of Office users, or whether they look like Luddite dead-enders.

It's not just about money. It's about the version you own no longer being stable. Now you MUST have the update with all the new features whether you wanted it or not. You MUST adapt to the changes that Adobe see fit to impose on you. It's all about control.

These kind of business models do alright for a while, but eventually they burn themselves out.

...paying one monthly fee — $50 for the standard version, or $30 for people
who already own Creative Suite CS3 or higher — gets you access to all
of the company’s creative apps, plus cloud-based services that tie them
together and let you store your projects in one online repository.

Let me translate this to the TRUTH:

We don't want you skipping versions and economically using old Adobe software. We want you paying $50 per month whether you use Adobe SW a little or a lot. Don't like that? Too bad, we're Adobe!!! We're invasive as he!! so you'd better just get with the program because in the future, we plan to stop supporting our stand alone SW you paid through the nose for.

Oh, and that other thing about putting all of your proprietary projects on OUR cloud servers. Why use up your safe & secure on-site storage? You can trust us. You trust the NSA don't you?

Shame, Shame, Shame on Adobe. We have been supporting Adobe since the very beginning. My Design firm is 30 years old as of July 3rd. I feel a death coming on. I would hate to total how many times we have paid and upgraded all these years, there should be a grand father clause!!!

As a sales decision, the Adobe Cloud pricing structure is very bad for schools and large companies that need many licenses. My school district bought licenses for hundreds of computers at educational discounts. We're on CS5 now. When we went to check out upgrading to CS6 we were told that the new system would not have bulk discounts and that every computer would have to have it's own Cloud account bought for it, making the total cost much, much higher for the school district.

If schools like mine are forced to go to other programs to teach graphics, animation, web design, etc,then Adobe will be losing a whole generation of new designers who won't be brought up on Adobe products. I think this could end up being very short-sighted on Adobe's part.

To allow companies to charge you no matter what will create an incentive for that company to do nothing. This is a great move for the company, not it's customers. Hopefully this decision will benefit Corel and it's competing products.

From ComputerWorld- "In a talk with Wall Street analysts on Monday, Adobe executives defended the shift. Not surprisingly, one of the most important reasons they gave was the regular revenue generated by subscriptions, eliminating the peaks when major upgrades release, and the valleys in between upgrades.

"The move to subscriptions just drives a bigger and bigger and bigger recurring revenue stream," said Mark Garrett, Adobe's CFO, during the presentation to analysts.

Garrett also claimed that 500,000 customers currently subscribe to Creative Cloud, and has set targets of 1.25 million by the end of 2013 and 4 million by 2015."

They're going to alienate some important, albeit probably small, segments of the design community. I worked within the government defense community for many years and never were we allowed to use the cloud as a repository or as a source for software. Everything had to be approved, vetted and went through several layers of security before it was allowed to be installed on the computers and, even then, certain features were left out of the install. I'm sure there are a lot more users of Adobe CS within government and other secure networks than they realize...who will now be forced to look elsewhere.

Most broadband providers impose data caps. Cloud based services and software help push users above data caps and make a user's work more available for others to steal. No thanks. I'll keep my data on my hard drives and stick with locally installed apps.

Irresistible means a price of $8/month. That's about as high as I can go for the amount I use, yet I still need occasional access to the gee-whiz features. That's why there's competition, I guess. Bye to 20 years with Adobe. I see a big problem for Adobe here.

My small business embraced Creative Cloud just over a year ago and it is the best thing we could have done. I've managed software for large and small design firms for over 20 years and the cost per month versus the cost per upgrade cycle easily comes out ahead in favour of CC. There are open source equivalents and the like but none of them truly have stability, ease of use and history that the Adobe product suite does. Adobe have moved in the right direction for themselves and their customers.

So the barrier to entry for new artists just got bigger. Say goodbye to the next generation.

The other issue is that if you are operating in other countries (non US) then the cost is very high. First we need to witness flash being burnt at the stake and now this retardation. Dont they know artists and creatives dont care what tools they use to get the job done.

They think they have loyal users. At least those at the top must think so.

There is currently very competitive software out there. Adobe you are playing with fire.

All these articles that say that "Customers "overwhelmingly" prefer it." are just copy writers trying to sell this idea to the public because they know there are going to be pitchforks and torches.

Any company can do whatever it wants with its invention and so can any customer. Adobe's strategy has been a losing proposition for awhile. Acrobat for PDF has lost the battle and most of the CS suite will also. There are plenty of good alternatives. Companies like Microsoft understand that there are plenty of alternatives to its product lines, so they are not going to abandon their revenue streams. However, Adobe is not one of the smart marketing companies around

The problem with the market place for Acrobat or MS Office is that you have people who don't want to give up the familiar. The problem for Adobe is that CS is used by professionals and advanced users who know how to switch. 600 dollars per year is too much and the claim that they have 500,000 paying customers already is bogus.

The idea of cloud computing was around in 1970s as client server applications, except now the network is the internet rather than internal.

I am surprised at this article which is primarily a marketing piece for Adobe. Had the writer been a journalist rather than a PR writer, you would have seen the fallacy of the strategy outlined.

Majority of software released these days is far beyond any one person's needs. A common sense person can use older software for decades to do the daily tasks. Take a look at MS Office 2013, it is beyond anyone's needs, Google docs and spreadsheet are free, why would I pay for Office 360? Why would I pay 50 per month when I can use CS-6 for the next ten years?

I'm not a PR writer; I'm a guy who doesn't necessarily agree with you. Though truth to tell, I don't actually state whether I think Adobe's plan will pay off; I'm not in the prediction game.

There have been good cheap-or-free alternatives to numerous Adobe products for a long time now, and it hasn't killed the company's business yet. There's value in being the standard in a category, as a bunch of Adobe products are in theirs. Not that the situation can't change if a company falls down on the job. (See: Quark Xpress.)